- Value-based financing principles to secure liquidity at all times, limit financial risks and optimize cost of capital
- Balanced maturity profile and diverse range of investors
- BASF’s external financing is largely independent of short-term fluctuations in the credit markets thanks to good credit ratings
We continue to aim for at least a solid A rating, which allows us unrestricted access to money and capital markets. Our financing measures are aligned with our operative business planning as well as the company’s strategic direction and also ensure the financial flexibility to take advantage of strategic options.
Maturities of financial indebtedness
Corporate bonds form the basis of our medium- to long-term debt financing. These are issued in euros and other currencies with different maturities to ensure a balanced maturity profile and diverse range of investors, and to optimize our debt capital financing conditions.
For short-term financing we use our well-established commercial paper program, which has an issuing volume of up to $12.5 billion. As back-up for the commercial paper program, we have access to committed, broadly syndicated credit lines: By signing a credit line of €3 billion expiring in 2016 to replace a credit line of $3.75 billion expiring in 2012, we were able to improve both our maturity profile and creditor structure. An additional credit line of $2.25 billion expiring in 2014 remains unchanged.
None of the credit lines were, or are currently being tapped. BASF’s external financing is therefore largely independent of short-term fluctuations in the credit markets.
Off-balance-sheet financing tools, such as leasing, are of minimal importance for BASF. BASF Group’s most important financial contracts contain no side agreements with regard to specific financial ratios (financial covenants). We are also not obligated to maintain a particular rating.
Financing instruments (million €)
On May 10, 2011, Standard & Poor’s raised its long-term rating for BASF by one notch from “A” to “A+,” maintaining a stable outlook. Moody’s last confirmed BASF’s A1 long-term rating on December 6, 2011, and rated the outlook as stable. BASF’s short-term ratings were confirmed by both agencies. With “A+/A-1 outlook stable” from rating agency Standard & Poor’s and “A1/P-1 outlook stable” from Moody’s, BASF has good credit ratings, also compared with its competitors in the chemical industry.
Financial management in the BASF Group is centralized and supported by regional finance units. To minimize risks and exploit internal optimization potential within the Group, we bundle the financing, financial investments and foreign currency hedging of BASF SE’s subsidiaries. When possible, this occurs within the BASF Group. Foreign currency risks are primarily hedged centrally by means of derivative financial instruments in the market.